-8-
partially mentioned the role of the corporation in petitioner’s
operation but did not state that petitioner lent money to the
corporation.
Subsequent to May 15, 1999, the Commissioner’s Problem
Resolution Program (PRP) referred petitioner’s case to the
Commissioner’s examination division, which assigned the case to a
revenue agent named Michelle Ho (Ho). Ho received the case on
June 5, 1999, reviewed the file, and requested additional
information from Keegan on June 15, 1999. Keegan refused to
provide that information, and he declined to meet with Ho at that
time. Ho determined shortly thereafter that no change to the
prior findings would be appropriate.
Subsequently, pursuant to a request from PRP, Ho
reconsidered the case and sent to Keegan an offer to allow
petitioner to deduct his verified interest as an expense. Ho’s
offer conditioned that deduction on petitioner’s recognition of
an equal amount of Schedule C income. Ho and her manager,
Darline Farr, later met with Keegan on October 28, 1999, to
discuss Ho’s offer. Following a lengthy discussion between the
three, Ho and Farr agreed to allow the interest expense of
$44,481 without requiring the recognition of a corresponding
amount of income.
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